1. Stakeholder Session #1 April 29, 2013
Stakeholder Consultation Distribution Custom IR Rate Application
Stakeholder Session #1
April 29, 2013

2. Agenda 2 1:00 p.m. Registration 1:15 p.m. Welcome
Allan Cowan, Director Major Applications,
Hydro One Networks 
1:20 p.m.
Introductions and Agenda
Bob Betts, Facilitator,
OPTIMUS|SBR 
1:30 p.m.
Plans for the Custom IR
Hydro One Networks
1:50 p.m.
Facilitated Discussion on Custom IR
2:35 p.m.
BREAK 
2:45 p.m.
Overview of Customer Survey
Laura Cooke, Vice President Corporate Relations
3:05 p.m.
Facilitated Discussion on Customer Survey
OPTIMUS|SBR
3:40 p.m.
Overview of Rate Classification and
Facilitated Discussion
Henry Andre, Manager Distribution Pricing
4:00 p.m.
Overview of Seasonal Rate Initiative and Facilitated Discussion
4:25 p.m.
Closing Remarks/Next Steps
4:30 p.m.
Adjourn  2

3. Facilitator’s Remarks
Introductions Facilitator, Bob Betts & OPTIMUS | SBR support team
Meeting Facilities
Safety Review
Note taking process
Participant Introductions 3

4. Meeting Process Mobile phones “Off” or “Silenced”
Avoid side discussions while others speaking
All questions are good ones
All comments are appreciated
Materials and notes will be posted on Hydro One’s Regulatory Website: 4

5. Distribution Custom IR Applications 2015-2019

6. Overview
Preliminary Timeline for our OEB Distribution and Transmission applications over the 12 months
Overview of Hydro One’s preliminary plans for the Custom IR (CIR) evidence
Solicit Stakeholder input on our approach and views regarding the Chapter 5 guidelines recently issued by the OEB
Identify items for next Stakeholder session 2

7. Renewed Regulatory Framework
Annual IR Index
Existing rates adjusted by the Annual Adjustment Mechanism (AAM)
Suited to LDC’s in a status quo mode
4th Generation IRM
COS for base year followed by 4 years under IRM with rates adjusted by the AAM
ICM available on application
Custom IR
COS type of review for 5 test years
Annual reporting requirements
Detailed investment plan support required 3

8. Regulatory Filing Timetable
Application
2013
2014 Q1 Q2 Q3 Q4 1
Dx IRM (2014)
File X 2
Dx 5 Yr CIR ( ) 3
Tx 2 Yr COS ( ) 4

9. CIR Under Chapter 5
Plan to follow a similar evidence format as in previous COS applications recognizing that significant more detail and 3rd party input required per Chapter 5
Continue to follow the SDO & Shared Services approach with high level mapping to new OEB investment categories where necessary
Distribution System Plan (DSP) will provide 10 years of spend detail ( historical, 2014 bridge and forecast) including comparisons to OEB approved levels
DSP developed after consultation with regionally interconnected distributors, Hydro One Transmission and the OPA 5

10. CIR Under Chapter 5 (cont)
DSP will show how investments benefit customers and is supportive of their preferences (Customer Engagement Activities) and contribute to reliability and other performance measures
Will identify methods and measures (metrics) which will be used to monitor annual performance
Regional Infrastructure Plans prepared by Hydro One Transmission in support of the DSP will be filed when available, Letter of Support otherwise
Detailed Asset Management Process section will provide support for investments planned & the prioritization of the work in the DSP leveraging our Asset Analytics tool 6

11. CIR Under Chapter 5 (cont)
Support for in-service placement of Smart Meters, Smart Grid and CIS and closing of associated variance accounts
Project by project in-service reporting of approved Distribution ICM projects
Smart grid and Renewable Energy Generation expenditures treated as a normal expenditures and will be included in the DSP 7

12. Custom IR Studies Required
Studies and analysis to be filed in support of the application will include:
Depreciation
Lead-Lag
Shared OM&A Allocation
Shared Asset Allocation
Overheads Capitalized
Line Loss
Seasonal Rates
Rate Classification 8

13. Areas for Future Stakeholder Session Discussions
Rate smoothing options to manage customer impacts over the 5 year horizon
Annual Adjustments
Performance Metrics and Scorecard elements
Study Updates
Customer Preference Update
Potential Off-ramps 9

14. Facilitated Discussion
Custom IR
Facilitated Discussion 10

15. Break

16. Customer Research Daffyd Roderick Director, Corporate Communications
April 29, 2013

17. Original 1999 Purpose Statement for Customer Satisfaction Research Program
The purpose of the research is to provide Hydro One with an on-going data gathering, analysis and reporting process that will significantly improve customer responsiveness and customer focused performance. The overall objective is to obtain a deeper understanding of customer needs to facilitate building and managing strong productive relationships with customers now and in the future. Specific objectives:
Desired Outcome:
Strong customer relationships based on competitively superior levels of operational excellence. 2

18. Survey Summary Residential and Small Business Impressions
Cross-Canada benchmarking, including CEA Public Attitude
Bi-annual (April/September)
Residential and Small Business Impressions
CCC, BCC, Complex, My Account, Provincial Lines connects/upgrades, Forestry, Gen Dx connections
Ongoing
Transactional Surveys
Large Tx, LDC, Gen Tx, LDA, Commercial Den Dx
Annual
Business to Business Impressions
Customer, key stakeholders
Re-start 2013
Brand Research
Post-event – retail events, fairs, community events
Event Surveys 3

19. Residential and Small Business
Our bi-annual residential and small business survey asks customers about the following*:
Overall impressions of Hydro One
Call Centre
Billing
Reliability/Outages
Communication
Conservation and Demand Management
*phone interviews conducted by a third-party in April/September 4

20. Residential and Small Business
Representative sampling of our rate classes
Sample Group
Total Completes W1 2013
Total
Completes
W2 2013
2013
Confidence Interval for Total 2013
Residential Low
350
700
3.7
Residential Medium
Residential Urban
125
250
6.2
Residential Seasonal
150
300
5.7
Residential Agriculture
100
200
6.9
GS Demand 80
160
8.0
GS Non-Demand 50
10.0
1205
2410
2.0
Scope: Impressions of overall service delivery: Overall Impressions, Rates, Bill & eBills, Reliability, Outage handling, Relationship, Access, Communications, Website, CDM
* +/- given number of percentage points at the 95% confidence level. 5

21. Key Issues Unsatisfied Customers want to see Addressed
End User
(n=42)
Responsiveness, follow-up
12%
Reliability/line maintenance/power quality
31%
Outage planning/outage notifications 7%
Communications/proactive phone calls
10%
Infrastructure/upgrade
Costs
19%
Accessibility 2%
Load transfers --
Other
LDA (n=54)
Cost effectiveness
39%
Reliability / line maintenance
30%
Efficiency / quality of service 9%
Responsiveness 7%
Communication / access 6%
Restoration time / outage handling 4%
Information 2%
No issues
17% 6

22. Residential and Small Business
Hydro One has put a Customer Satisfaction Leadership Team in place to look at the research findings
This cross-functional team puts actions against some of the areas where Hydro One can improve
Meet 2-3 times per year 7

23. Out of Research…
Customer research has played a major role in informing how we operate
Development of industry leading Estimated Times of Restoration
Improved HydroOne.com
Development of Outage App
Forestry practices
Some things we don’t do 8

24. Next Steps
Renewed Regulatory Framework requires us to seek more information to guide investment
Factors could include Power Quality, Reliability versus Price
Seeking input from Stakeholders on methodology and areas of focus for improving research 9

25. Facilitated Discussion
Customer Survey
Facilitated Discussion 10

26. Rate Class Review

27. Hydro One Rate Class Review
As part of the settlement in HONI’s 2013 Dx Rates Application, we agreed to make best efforts to review the rate classifications of our customers to ensure they are within the appropriate current rate classifications.
Rate Class review will ensure that:
customers located in communities that have grown are located in the appropriate rate class
Clean-up current customer classifications to align with approved rate class definitions 2

28. Leveraging GIS Tool
The Geographic Information System (GIS) is a tool that provides information about the physical location of our assets and customers.
HONI will undertake an analysis that leverages the power of the GIS tool to identify density zones based on the distribution of customers and km of line.
The GIS tool will help to better understand the distribution of our customer base by allowing the visualization and analysis of the data in ways that have not been available in the past. 3

29. Proposed Rate Class Review Process
Identify customer clusters that meet approved Density Zone definitions:
>3000 customers and >= 60 cust/line km (High density zone)
>100 customers and >= 15 cust/ line km (Medium density zone)
< 15 cust/ line km (Low density zone)
Use GIS layer information to identify Density Zone boundaries that can be clearly communicated and implemented. GIS layers include:
physical boundaries such as roads, railways, rivers, lakes
property fabric (e.g. lot and conc, land parcels)
Confirm the # of customers that shift between rate classes, which will then be used to update our Load Forecast and Cost Allocation Model inputs for the Customer IR pre-filed evidence
Define on-going process to maintain Density Zone boundaries up-to- date 4

30. Facilitated Discussion
Rate Class Review
Facilitated Discussion 5

31. Consultation on Seasonal
Customer Rates

32. Seasonal Rates Pre-Harmonization
Seasonal customer rates have been in place since the 1970s
A Seasonal customer is defined as any residential service not meeting the residential year-round criteria. It includes dwellings such as cottages, chalets and camps.
A Seasonal rate class recognizes that average monthly consumption for Seasonal customers (~500 kWh) is well below that of full-time residential customers (~1000 kWh)
Prior to harmonization of rates as part of HONI’s Rates Application, HONI had 2 Seasonal rate classes (R3 and R4) 2

33. Rates Harmonization
As part of HONI’s 2008 Rates Application (EB ), the number of rate classes administered by HONI were reduced from >300 to 12
The harmonization process combined the two Seasonal rate classes (R3 and R4) into a single Seasonal class
The harmonization process adopted the lower R3 fixed charge as the “target” for the harmonized class
shifted revenue to be collected from fixed to variable charge
Dx revenue requirement increases between 2008 and 2011 were largely absorbed by higher variable charges
The harmonization process was stakeholdered, approved by the OEB, and implemented over the period 3

34. Process for Addressing Seasonal Customer Issues
Solicit written comments from broad representation of Seasonal stakeholders on their key issues (June)
Provide written feedback from HONI on issues and options for addressing issues (July)
Hold Seasonal stakeholder session to review options and finalize proposals for addressing issues (early Sept)
Incorporate proposed solution into pre-filed evidence for load forecast, cost allocation and rate design 4

35. Facilitated Discussion
Seasonal Rates
Facilitated Discussion 5

36. Thank you for attending! Check our website for further information: